French retailer Carrefour cautious on 2018 as sales growth slows

PARIS : Europe’s largest retailer had in January announced plans to cut costs and jobs, boost e-commerce investment and seek a partnership in China in an effort to lift profit and revenue and help it to contend with competition from U.S. online retail giant Amazon <AMZN.O>.

However, Carrefour reiterated on Wednesday that 2018 earnings would reflect negative currency exchange rates, notably for the Brazil real, and higher asset depreciation.

Pressed on when an improvement in the group’s performance could be expected, finance chief Matthieu Malige told analysts only that there was “positive momentum” on cost savings, having earlier said it was difficult to predict second-quarter sales.

“This quarter further demonstrates that Carrefour’s 2022 transformation plan is the right strategy,” Malige said.

The group reported that sales at its French hypermarkets had turned negative again, citing bad weather, stiff competition and strikes during the Easter holiday, while sharp food deflation slowed sales growth in Brazil.

Carrefour’s lacklustre performance comes as British counterpart Tesco <TSCO.L>, which faced some of the same problems a few years ago, is reaping the rewards of its own revamp with a 28 percent jump in full-year profit.

Improving the French hypermarket business is a priority for new Carrefour boss Alexandre Bompard, who joined in July.

The goal has eluded several predecessors in the face of online competition from the likes of Amazon and discounting from rivals including unlisted Leclerc, which has overtaken Carrefour as France’s top food retailer by market share.

In France, where Carrefour makes 47 percent of its sales, like-for-like revenue fell by 0.1 percent year on year, compared with 1.5 percent growth in the fourth quarter of 2017.